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Holistic Guidance - Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis
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List Price: $27.95
Our Price: $18.45
Your Save: $ 9.50 ( 34% )
Availability: Usually ships in 24 hours
Manufacturer: Wiley
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Average Customer Rating:  
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Binding: Hardcover
Dewey Decimal Number: 332.720973
EAN: 9780470292778
ISBN: 0470292776
Label: Wiley
Manufacturer: Wiley
Number Of Items: 1
Number Of Pages: 352
Publication Date: 2008-07-08
Publisher: Wiley
Studio: Wiley
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Editorial Reviews:
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In the summer of 2007, the subprime empire that Wall Street had built all came crashing down. On average, fifty lenders a month were going bust-and the people responsible for the crisis included not just unregulated loan brokers andcon artists, but also investment bankers and home loan institutions traditionally perceived as completely trustworthy. Chain of Blame chronicles this incredible disaster, with a specific focus on the players who participated in such a fundamentally flawed fiasco. Authors Paul Muolo and Mathew Padilla, well-regarded journalists for National Mortgage News and the Orange County Register respectively, reveal the truth behind how this crisis occurred, what individuals and institutions-from lenders and brokers to some of the biggest investment banks in the world-were doing during this critical time, and who is ultimately responsible for what happened.
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Spotlight customer reviews:
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Customer Rating:
Summary: What goes up.....
Comment: This book is of particular interest as I am a Mortgage Trader at a regional investment banking firm. My business was terrible from 20004-2007 as virtually every loan that was made was securitized. There were no portfolio lenders for me to manage their portfolios. You would think with this insight and the fact that I gave speeches from 2004 about the coming housing crash I would be insulated from this debacle.
Unfortunately, while my business has returned to record levels as banks need help with their bad assets, I also underestimated the risk level and some of my leveraged investments were the hardest hit. Not "Madoff" level hits but not far from it. So, have a good laugh at my expense. I deserve it.
This book does an excellent job explaining the series of events and working arrangements that led to this environment. Yes, mortgage brokers had every incentive to originate the loan and some false information sure wouldn't hurt their income. The Mortgage Companies became addicted to growth and stock levels. And Wall Street, the smartest guys in the world (just ask them), was the biggest crack addict to subprime mortgages.
This book specifically closes with a damning section of Wall Street, their involvement, and the specific people that made decisions to grow the business in some cases causing them their jobs and reputation.
A substantial amount of the book is about Mozilo, Chairman/Founder of Countrywide, the largest mortgage banking firm who was late into subprime as he was concerned about the credit. The book reports both good and bad and while I'm sure he wouldn't like how he is portrayed, it's a very fair picture. A "from the street guy" who grew nothing into a real giant and revolutionized mortgage banking. In the end, he has money but a tattered reputation having to attend a congressional hearing where he was told what a bad guy he was.
The only person not really faulted is the consumer. Consumers have overspent for over 10 years and as long as credit in the form of mortgages, home equity lines, and credit cards were available, they would use it. I recently talked to a relative over 70 with a minor retirement from 20 years of military service who was laid off his job. He disclosed he had $50,000 of credit card debt, all current as he is a solid American who would never knowingly make bad debts. But it really doesn't matter. He can't afford this debt and this is about to be a loss. NO WAY AROUND IT! That is the mentality in America now.
As I do lots of business with FNMA and Freddie Mac I am compelled to say that the recent political climate has made them the target of blame. Their A Credit mortgage machine has done more for housing in America than any other factor and I hope they are left to continue this process although I believe they should be government owned as their advantage is the cheap borrow costs of the implied government guarantee they enjoy. They have admitted to me during this period that they were challenging whether they were obsolete and the old rules didn't apply. So they stuck their toe in the A- credit market. FNMA currently has 11% of their portfolio in Alt A paper. 50% of their losses is from this lower grade of paper. The math does not work. Lower credit people will default and a higher interest rate will not compensate. It's been seen time and time again dealing with subprime auto paper since the 80s.
Bubbles happen and people become blinded by greed and the belief that there is money to be made. I certainly found myself caught in this "asset devaluation vortex". AND IT WILL HAPPEN AGAIN! For now we need to save, stop borrowing and return to values more simplisitic. At least that's what I'm attempting to do.
Read this book for an excellent BUT technical analysis of the subprime debacle. Very well written.
Customer Rating:
Summary: Reads like a work of fiction, but it's all true
Comment: I've been in the real estate and financial planning field for almost 30 years and even though I like to think I'm an insider, much of the past lending mess was happening while I wasn't watching closely. Sure we saw the direction of where it was headed back in '05 and after, but what happened prior to that was eye opening. This book almost reads like a "whodunit" and the villains are many.
As a radio talk show host since 2002 we cautioned many of our listeners and clients of the pitfalls of these easy doc loans and warned against 100% financing, but greed and optimism are very compelling. And this book exposes many of the people behind the scenes who were guilty of the EXACT same mentality. How the "Big Boys" could say they didn't see what was going to happen is frightening and Matt & Paul pull all the skeletons out of the closet and expose them for what they are/ were.
Will we ever get out of this mess? Yes indeed. Will this Chain of Blame develop again? Probably.
Customer Rating:
Summary: You wanted to know
Comment: This book tells it like it is. It's clear, well ordered, and very readable. But it's a little scary to realize how greed can control a country like ours.
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Summary: An easy to read explanation of the Mortgage crisis; needs some editing though
Comment: This book clearly spells out what went wrong to precipitate the mortgage crisis that catapulted the financial markets into a global meltdown. The book uses simple language to describe complex concepts, which is very helpful to the financial novice like myself. In this sense, this book is wonderful.
However, the book is way too long. Some whole paragraphs are repeated almost verbatim in different chapters. Each paragraph chronicles the life and times of another major mortgage company. While this concept is ok for telling stories about the individuals involved in the business, it makes for highly repetitive reading, as the mistakes made by one company are often made by others. The first 150 pages is a tough slog of similar people and similar stories, but the book picks up steam in the final 150.
Finally, while this book does a great job of explaining the mortgage industry and their role in the financial crisis, the authors make a cursory explanation of what truly happened on the Wall Street side of things. (This isn't too unexpected because the authors are mortgage experts.) For example, there is basically no mention of the subsequent credit crunch that was precipitated by the sub-prime mortgage disaster.
For a good explanation of what went wrong on the Wall Street side of things, I recommend 'The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash'. That book is not an easy read, because the author expects the reader to have a solid understanding in Wall Street lingo. But 'Chain of Blame' is a useful primer.
Customer Rating:
Summary: Pleanty of blame to go around..
Comment: This book was an easy read. I like the way the authors tried to keep it simple, which must've been a challenge. This whole crisis and why it happened, is not that simple to explain, so the average person, who's not in the world of high finance can understand. Muolo and Padilla did a good job breaking it down for us; exposing the culrpits involved and tried to give us an idea of what these guys were thinking. Obviously, they all swallowed that line from the movie Wall Street, "Greed is good", and paid a hefty price with other people's money.
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